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President Dilma Rousseff was finally toppled down today. Yes, it's a coup, different in nature to the previous ones (last in Brazil was in 1964), but with the same consequences. I have discussed the nature of the process here, here, here, and here (this last more on the economy, from last year) before. It is a coup that has received discrete support from the US government, by the way, as much as the elected neoliberal government of Macri in Argentina (Obama visited the latter, a government that basically tries to vindicate the last and genocidal dictatorship in Argentina).

A good summary of the mess is available here. Important things to remember: she is NOT implicated in corruption (contrary to Fernando Collor that was impeached in 1992, so that was NOT a coup), and even if one has qualms about the fiscal transfers ("pedaladas") that are the formal cause for the impeachment (and one shouldn't really, since these are not crimes of responsibility, or crimes at all), …

The Economist's brief is available here (subscription required). I have discussed the limitations of the Mundell-Fleming model in some posts (here and here, for example). But I have not discussed the limits to the trilemma fully. In this paper, I argue that under certain circumstances, associated to what Ben Cohen calls the geography of money, the trilemma might not hold. The countries at the top of the pyramid with convertible currencies do not face the harsh trade offs of the countries at the base.
As I said back then:
"The United States during the current crises is an example of the reduced impact of the trinitarian trade-offs for countries with convertible currencies. In fact, even though the economy was in a deep recession by the last quarter of 2008, the dollar, which had depreciated considerably over the previous years, started to appreciate as investors increasingly ﬂed to Treasury bonds for safety. In other words, even though rates of interest were reduced to deal wi…

New paper available here. From the abstract:Several recent critiques have questioned the theoretical logic of standard models of balance-of-payments-constrained growth (BPCG) and the empirical support for ‘Thirlwall’s Law’. On the empirical side, critics charge that most econometric estimates of this model have effectively only tested whether exports and imports grow at similar rates in the long-run. On the theoretical side, the criticisms have focused on the role of foreign income growth, capital accumulation, relative prices and country size in BPCG models. This article reviews the current state of the debate over these critiques and also offers a brief discussion and evaluation of three alternative models. The alternative models all highlight a significant role for the level of relative prices (or the real exchange rate) in determining long-run growth, which is consistent with recent empirical studies.
My paper cited there can be downloaded here (in Spanish). Thirlwall's refle…

Nothing much changed since I posted on this a couple of years ago. The U.S. net international investment position at the end of the first quarter of 2016 was −$7.5 trillion, which corresponds to about 40% of GDP, higher than two years ago. But no real problem in my view
Note that this is the sort of number that economists show when they want to suggest a possible run on the dollar, and the demise of its role as a reserve currency. The last report by the Bureau of Economic Analysis (BEA) is available here.

Teaching Latin American Economic Development. Asked students to match the list of countries below with the graph representing GDP per capita in 2016 (source here). List of countries: Argentina, Brazil, Chile, China, Congo, India, Mexico, Norway, Saudi Arabia, and the US.
The point I always try to make is that Latin American economies are (most of them) middle income countries, all the ones in the sample with higher GDP per capita than China. That's often a surprise for many students, which think that China is an advanced economy (yep, grows fast, less now, but it's still a middle income economy, and will probably remain so in the foreseeable future). Also, Saudi Arabia has a very high level of GDP per capita, but it's not really a developed economy. An advanced economy produces more than commodities (oil in this case). So what the economy produces and exports matters.

As it is often the case when you've been blogging for a while, there is always a precedent, and one might have written about a particular topic. Noah Smith, which I think has been blogging for a shorter period of time than I've been, now comes up with another take down of heterodox economics (having difficulties of understanding the meaning of the mainstream, it's no wonder he gets heterodoxy wrong; on the definition of the latter go here).

He argues that "much of heterodox theory is non-quantitative." True, but so is the case with the mainstream. Not everything can be formalized. And there is qualitative knowledge. But, having said that, the point is that difference between the mainstream (marginalism, neoclassical economics) and heterodox approaches has nothing to do with the lack of formalization of the latter. His examples of heterodoxy are not the best, I would argue. He first deals with Hyman Minsky, which in my view accepted a good chunk of mainstream ide…

John Cassidy is one of the best economic journalists around (together with Jeff Madrick probably). And not only because he has written about one of my mentors, Wynne Godley. In his last column he tackles the issue of productivity. And again I should say he is on the right track. He first gives a simple example of technological change from the donkey to the truck delivery system. Almost imperceptibly he tells you that you would change from one to another technology if: "you can find enough customers." Exactly, why would you invest in the new technology, the truck, if nobody is demanding more deliveries which would make the truck cost effective.

At any rate, he suggests three explanations for the current productivity slowdown (or the new concerns about it, since the Great Recession; this had temporarily vanished in the late 1990s when productivity picked up as a result of the so-called New Economy, i.e. information technology). The first, is that it's all a measurement pr…

My favorite is still Essays in the Theory of Economic Growth
Back from a summer road trip. Should start to blog more consistently soon. Here a new paper from John King in the last issue of ROKE. From the abstract:
Joan Robinson's magnum opus, The Accumulation of Capital, was published 60 years ago, in 1956. I begin this diamond jubilee assessment by explaining the intellectual background to the book, placing Robinson's attempt to ‘generalise the General Theory’ in the context of the contemporary work of Harrod, Kaldor and Kalecki. I then provide a brief summary of the eight parts of the book before focusing on the analytical core, the analysis of ‘accumulation in the long run’ that is provided in Book II. Next I outline the critical reception of the book in the late 1950s and Robinson's reaction to it, both then and later in her career. I conclude by documenting the rather limited influence of The Accumulation of Capital in the longer term, even among heterodox economists,…